India's economy surged in the first three months of 2004 and analysts are predicting the boom will continue.

Growth from January to March was 8.2% compared with a year earlier. But the figure was lower than forecast and down from 10.4% the previous three months.

Analysts, however, remained upbeat because of the global economic recovery and the recent good monsoon seasons.

Agriculture accounts for about 25% of total gross domestic product (GDP) and crops are at record levels.

As a result, economic growth in the past fiscal year, which runs from March to March, was 8.2% - the fastest expansion in 15 years.

However, the boom may increase pressure on the central bank to raise borrowing costs, analysts said.

Cash crops

The much improved agricultural sector - driven by a good monsoon season - has helped boost consumer spending among the more than 600 million people who rely on the land for their living.

Too much monsoon rain can be as much a problem as too little

According to the statistical office, agricultural production rose 10.5% in the first quarter.

Analysts are expecting farm output to dip in coming months and the first quarter figure compares with growth of 16.5% in the previous three months.

"The farm sector has done exceptionally well in the 2003-2004," said Manas Paul, chief economist at Securities Trading Corporation of India. "But in the next year, it might not be possible to sustain this growth level."

Other sectors are expected to take up the slack and performed well during the first quarter.